The Truth about the Cedar Falls Municipal Communications Utility:

Choice, Competition and Local Control. The Cedar Falls Municipal Communications Utility was formed in 1994 with 70% approval of a city referendum. Our city built a hybrid fiber-coax (HFC) communications plant. We began offering cable TV service in February, 1996 and high speed home Internet service in January, 1997.

The community voted yes for three reasons. People wanted a choice of cable providers. They wanted competition that would hold down prices. They wanted local control over how the service was run, so that Cedar Falls would be one of the first cities to have affordable high speed Internet access, not one of the last. Our Utility has delivered all three, while paying for itself through user fees without a penny of tax money. The facts:

Competition means choice. When a town has only one cable company, it operates as a monopoly. Cable and Internet rates are not regulated by federal, state or local government, so the monopoly can charge whatever the market will bear and consumers have no place else to go. Competition is essential to making free enterprise work, protecting consumers from poor service and monopoly price gouging.

Competition means lower prices. We offer 70 channels of Cable TV for $34.50, and our most popular TV plus high speed Internet package costs $69.50. Statewide, the average cost of these services in markets where Mediacom is the only provider is now more than $90 per month. The price difference saves Cedar Falls residents more than $2 million per year. Both CFU and Mediacom customers benefit, because Mediacom charges less in communities where it faces competition than it does in its monopoly markets.

Local control puts community needs ahead of investor profits. CFU launched business and residential high speed Internet services in January, 1997. The private cable company offered residential service four years later and business service six years later. The private phone company made DSL widely available in Cedar Falls just last year. Without CFU, our community would have been among the last to have access to these critical services. With local control we were among the very first, giving our citizens and businesses a quality of life and economic development edge.

Community broadband is business friendly. Affordable municipal broadband helps the Cedar Falls business community prosper and grow. CFU built its fiber plant to our city’s Industrial Park when few businesses were located there, and it became an economic development magnet. The private cable company hasn’t built infrastructure there to this day. In the past ten years, our Industrial Park has grown from 30 to 146 businesses, 1,400 to 4,300 people employed and $5 million to $54 million in taxable valuation. More than 450 businesses throughout the community use our city communications services today.

Our Communications Utility pays for itself through user fees. Nearly 80% of the cable TV customers and 85% of the high speed Internet customers in Cedar Falls choose CFU services. Subscriber fees are the one and only source funding for the Communications Utility, which under Iowa law MUST and DOES operate as a separate business. It is illegal to use revenue from any other utility to pay the operating expenses of a Communications Utility. Furthermore, no tax dollars have ever been used to fund the Communications Utility.

Our debt is going down, not up. Contrary to what the attack ads say, our Utility is in sound financial condition, earning net income of more than $1 million per year. We borrowed money both for initial construction and to fund major plant expansions, and we have made all debt payments on time. We set our rates as low as possible while covering operating expenses, ongoing plant improvements and debt payments. We are on track to pay off our outstanding long-term debt five years ahead of schedule by the end of 2011.

Cedar Falls Utilities Oct. 2005